Among the many letters The Straits Times received in recent months from folks who called for changes to the COE (certificate of entitlement) system, a few stood out – their writers suggested that the Government allocate COEs according to bidders’ needs. These readers wrote that people with jobs that require lots of commuting, or those with young children or taking care of aged parents, should be given priority access to cars.

The suggestion is easy to dismiss as it appears ridiculous, impossibly cumbersome to apply and administer, and runs smack against the purity of the current capitalistic system – where the price mechanism decides who gets a COE.

The COE system, which turns 23 this year, has proven largely effective in controlling Singapore’s vehicle population growth, even if the targeted rate of growth has not quite been met consistently. It is a clean, cold and calculated system that lets economics run its course. Supply, demand, competitive auction, transparency – ingredients which ensure that those who are most willing and most able to pay will get a new car. Why muddy it with needs-based components?

Well, it is interesting to note that the late Dr Goh Keng Swee, one of Singapore’s greatest policy-makers, mooted such an idea back in the early 1970s. In his book The Practice of Economic Growth (1977), a collection of speeches he made, Dr Goh touched on controlling Singapore’s vehicle population through a quota system.

In it, he argued that such a quota system, where bidders compete for the right to own a car, could be the way forward (he spoke about it some 20 years before the COE system was implemented). But he also suggested that the Government set aside some permits for certain deserving professions, such as teachers and policemen. He also mentioned administrative officers in the civil service.

Dr Goh did not articulate the rationale for this, but it is perhaps reasonable to assume that he felt certain people whose services are valuable to society, but who may not be able to compete with the wealthy for the right to own a car, should receive some form of dispensation.Of course, the professions he cited are much better-paying today, and most people in those jobs are quite capable of buying a car themselves. But the thinking behind Dr Goh’s suggestion was one grounded in some form of social equity.When the COE system was implemented in 1990, it featured a fairly strong element of social equity. There were many more car categories than today, so that bidders in lower income brackets are shielded somewhat from those who are better off. But the four car categories were merged into two in 2000. The move resulted in the demise of (cheaper) small cars. There was an outcry, but the authorities did not relent. Still, there was some fairness in the revised format, as big-car buyers do not compete with the rest for certificates.

That lasted a few years. Today, COE Category A (for cars up to 1600cc) has been “infi ltrated” by luxury makes with 1.6-litre models. This has caused premiums in the category to spiral northward. Recently, they crossed the$90,000 mark to end not far from the Category B (cars above 1600cc) price.

Despite repeated calls for a review of the system, nothing has been done to return some equity into it. It’s a shame, really, because there are various ways to modify the process so that bidders who aren’t that rich can have a fair shot at acquiring a new car.One way would be to revert to the four categories. Another would be to segregate vehicles according to their open market value (OMV) instead of engine displacement. For the latter, perhaps cars with OMVs of up to $25,000 can reside in Cat A, while the rest can go into Cat B.

Whatever form the modification takes, the final objective of the COE system remains unaffected: it will still control the rate of vehicle population growth. The difference would nevertheless be tremendous to consumers at large. A review will also go to show that the Government is one that rules not only with its head, but also with its heart.

And if we were to apply the late Dr Goh’s principle of rewarding certain groups of people by granting them easier access to a car, perhaps we could consider married couples with more than two children. That will certainly help to solve Singapore’s dismal birth rate.

This article was written by Christopher Tan, consulting editor for Torque.

How the hell does making exceptions for people help bring about fairness in the COE system? I wonder how is it even possible that an editor for Torque could write such an article. While the article seems rather neutral, it is filled with suggestions that have already been dismissed by LTA. This article is absolutely pointless!

LTA's move in tampering with the CAT A COE was simply a way to shut people who are whining about the COE system. Sadly while attempting to please the masses (who have no idea about Economics), LTA screwed the system up. I don't see COE prices going down. The system was fine to begin with. In fact it is very efficient. Just that all the bloody whiners could not see that.

There's a saying that goes, If it ain't broke, don't fix it.

There's nothing wrong if the luxury brands enter CAT A (supposedly meant for lower income people). It just means that other brands have a lot of catching up to do in terms of innovation and technology.

If you want something, you have to pay the price. That's how the free market works. Its not like a car is a basic necessity that requires the government to impose a price control. You can do without a car but you can't do without food now can you. What needs to be instilled in Singaporeans is that a car is not a necessity. It's merely a want and desire fuelled by consumerism.

If you ain't got the cash for a car then don't think of buying one till you have enough. Furthermore, I'm very sure people who whine about COE prices being high won't be able to afford a car even if COE prices dip drastically.

It is risky to have a policy to reward married couple with 2 children with lower coe premium
Will end up with a lot of social problems
E.g. couples who can only afford to raise one child end up having another just to be able to own a cheaper car